Demand Driven MRP – the 5 Elements
There are 5 major elements to Demand Driven MRP (DDMRP)
- Strategic Inventory Positioning – literally, where in the Bill of Material structure, or where in the supply chain, should we hold inventory to provide the maximum benefit to performance? This is a crucial first step for Demand Driven MRP DDMRP.
- Buffer Profiles and Buffer Level Determination – establishing the “profiles” for the Buffer Stock, such that parts with high variability and high volume (for example) will have a different profile than parts with high volume and low variability, or parts with low volume and high variability, etc; then, actually setting the inventory levels.
- Dynamic Buffers – Over time, many realities might change from the initial starting point for the buffer – demand and demand patterns change, the degree of variability changes, seasonality issues might emerge, there might be decisions to ramp-up or phase-out a product … Dynamic Buffers respond to these.
- Demand Driven Planning – Parts are designated as Replenishment or Replenishment Override or Min-Max or non-buffered … then the MRP-type planning explosions kick-in, with decoupling at replenishment points.
- Highly Visible and Collaborative Execution – Execution is one of the Achilles heels of the ERP/MRP world; the “P” in MRP stands for Planning, and MRP was never intended to be an execution tool. DDMRP Demand Driven MRP provides strong execution support.
